Largan’s earnings per share were NT$29.96 in the first quarter, making the January-to-March period the firm’s poorest showing of the past seven quarters.

Gross margin fell from 70.94 percent for the same period a year earlier to 63.33 percent, its lowest of the past eight quarters, while operating margin dropped from 61.87 percent to 52.82 percent.

Largan chief executive officer Adam Lin (林恩平) attributed last quarter’s poor performance not only to its weaker top-line numbers, but also to a dip in the production yield rate as the company took on new customer designs.

“There is always a learning curve for new designs,” Lin said during a teleconference.

Looking ahead to this month and May, Lin said that the company is not expecting sales to decline further from last month, which came to NT$3.14 billion, 13 percent lower compared with the previous year.

In addition, Largan plans to continue efforts to secure orders from South Korean smartphone vendors for its all-plastic 3D sensing solutions, Lin said.

Handset cameras with plastic lenses are to remain the company’s focus this year, Lin said, adding that while current hybrid glass-and-plastic solutions do not provide any advantage for smartphones, they might be better suited for automotive applications.

The company expects this year to mostly ship handset camera lenses with six layers, while its seven-layer solution — which is widely regarded as a competitive edge over rivals worldwide — is to enter mass production next year, he said.

While Lin declined to comment on whether the company’s customers were forced to divert orders to other suppliers due to its poor yield rates in the past quarter, Largan’s performance echoes the findings of a recent report by Taipei-based KGI SecuritiesCo (凱基證券) analyst Kuo Ming-chi (郭明錤).

According to Kuo, some of Largan’s customers moved their orders to China-based Sunny Optical Technology Group Co (舜宇光學) during the first quarter because the Taiwanese company struggled to meet field curvature specifications for high-end Chinese smartphones.

As Largan’s yield rate improves, Kuo expects the company to regain some of its customers as some major brands prepare to launch this year’s flagship smartphones.

With two to three times the production capacity of Sunny Optical Technology Group, Largan still holds a significant advantage in terms of business scale, Kuo said, adding that the Taiwanese company would likely make headway in the market for lower-tiered lenses with four or five plastic layers.

Largan shares yesterday rose 2.17 percent to NT$3,300 in Taipei trading, but the share price has dropped 17.91 percent this year, compared with the broader market’s 2.94 percent rise over the period.

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